While economists debated inflation’s staying power, crypto markets made their feelings crystal clear. January’s CPI data landed with a thud – 3% annual inflation, a smidge higher than expected. The crypto market responded like a spooked cat. Bitcoin tumbled below $95,000, dragging the entire market into a sea of red. So much for digital gold as an inflation hedge.
A staggering $1.48 billion in crypto positions got liquidated in just 24 hours. Bitcoin/USDT pairs accounted for $800 million of that bloodbath, while Ethereum holders watched in horror as another $400 million evaporated. XRP traders weren’t spared either, with $100 million gone in a flash. Trading terminals worldwide lit up like Christmas trees – the wrong kind.
Bitcoin’s price action told the whole story. From $62,400 to $59,800 in just three hours. Brutal. It briefly touched $94,200 before dead-cat bouncing to $98,100. Trading volume surged 35%, hitting 24.6 billion USDT as panic set in. Technical indicators flipped bearish faster than a politician changes positions. The blockchain technology upgrades failed to prevent the market downturn despite improved transaction speeds.
Bitcoin’s whiplash price swings left traders breathless as panic selling triggered a market-wide meltdown.
The altcoin market? Complete carnage. Ethereum dropped $200, Solana shed 10%, and Cardano holders watched their bags lighten by 12%. AI tokens saw frenzied activity, but not the good kind. Litecoin bucked the trend with a remarkable +46% market cap increase from early to mid-February.
Market sentiment shifted dramatically. The Crypto Fear & Greed Index plunged from 62 to 45, swinging from “Greed” to “Fear” overnight. Funding rates turned negative for the first time in three months. Nobody wanted to be caught holding the bag.
On-chain metrics painted an equally grim picture. Transaction volumes soared as traders rushed for exits. The average 30-day active wallet was down 2.9%. Ouch.
The Fed’s role can’t be ignored. With inflation stubbornly above target, rate cuts look increasingly unlikely. Trump wants lower rates. Powell isn’t having it. The monthly inflation increase of 0.5% marked the largest jump in a year, further diminishing hopes for monetary policy relief.
Meanwhile, institutional investors maintain their poker faces, apparently unfazed by the volatility. Must be nice having those deep pockets.
